US ethane glut to boost petrochemical margins

Ethane production in the US is likely to grow to 1.11 million bpd in 2013, 125,000 bpd more than in 2012, the report finds. Petrochemical demand, however, will not keep up with the flood of ethane supply.

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The US will have 60,000 bpd of surplus ethane in 2013, global
consultancy ESAI Energy reported on Friday, citing
its recently published Global Industrial Fuels
Outlook.

The supply surplus results from new natural gas liquids (NGL)
fractionation capacity, the group said.

Even after modifying existing ethylene plants to process
more ethane, the US market will have an even bigger surplus
than it did in 2012, according to the report.

This supply glut and restrictions on the amount of ethane that
can be left in natural gas will significantly weaken ethane
prices in 2013, helping the petrochemical industry.

In response to rising shale gas production, total NGL (natural
gas liquids) fractionation capacity in the US will grow to 2.6
million bpd in 2013, increasing by 575,000 bpd from
2012.

In turn, that increased fractionation capacity and rising NGL
pipeline capacity to move natural gas liquids to the Gulf Coast
will enable more ethane production. Ethane production in the US
is likely to grow to 1.11 million bpd in 2013, 125,000 bpd more
than in 2012, according to the report.

Petrochemical demand, however, will
not keep up with the flood of ethane supply, ESAI
officials say.

Based on new capacity and announced modifications to
existing capacity, ethane demand is projected to increase by 100,000 bpd
to 1.05 million bpd, said ESAI Energy analyst Vivek
Mathur. "This means there is about 60,000 bpd of surplus ethane
this year. Of this, about 50,000 b/d could be left in the
natural gas stream.

"But 10-15,000 bpd of ethane will struggle to find a home
because of restrictions of how much ethane can be left in dry
natural gas. Piped gas specifications generally allow for up to
12% of ethane in natural gas, but can vary depending on
processing and commercial arrangements. This additional supply
will depress US ethane prices and support petrochemical margins."

Gas turbine suppliers are testing the limits of their DLE combustors for ethane consumption. GE now allows up to 20% ethane in the turbine fuel for LM2500s and LM6000s. Siemens is allowing 80% ethane fuel in their standard combustors for the SGT 700s and SGT 800s.

Looks like a great opportunity for power plant fuel.

William Blackwood04.10.2013

Someone will have the bright idea of making the surplus ethane into ethanol.This will have at least two benefits right off:1. It will take the pressure off the food supply. Not as much corn will be needed to make ethanol, so food will become slightly more affordable. Ethanol supply will be less subject to droughts etc.2. The EPA will be forced to revise its unrealistic demands for biomass ethanol with this new supply of ethanol.